Dealership owner Greg Greenwood thinks the Cruze could keep Lordstown off the closing list
Dealership owner Greg Greenwood thinks the Chevrolet Cruze could keep Lordstown off the closing list.
STAFF/WIRE REPORT
General Motors’ ongoing investment in Lordstown puts the local car plant in good position to survive the automaker’s massive restructuring, which includes closing five more U.S. factories, a local auto dealer said.
Greg Greenwood said he knows that alarm bells will be sounding in the Mahoning Valley after GM said Tuesday that it plans to close more factories as part of its plan to obtain federal government financing.
The owner of Chevrolet dealerships in Austintown and Hubbard said, however, that he would be “very surprised” if Lordstown was put on the list of plants that are to close by 2012. GM officials declined to identify plants that would be closed.
Greenwood noted that GM is in the midst of investing $350 million in the Lordstown complex to start building the new Chevrolet Cruze next year. The car already has been designed and will be built at factories in other countries later this year, so it seems unlikely that GM would eliminate the project, he said.
Plus, GM has said that fuel-efficient vehicles will be key parts of its future product lineup, he said. The Cruze is expected to get up to 40 mpg.
In presenting turnaround plans to the government, GM and Chrysler asked the government for an additional $14 billion in aid, a dramatic acknowledgment that conditions in the U.S. auto industry have grown significantly worse in just two months.
Chuck Eddy, an Austintown Chrysler dealer who went to Washington last year to make a case for funding, said he thinks the Obama administration understands the importance of keeping the industry alive.
“I’m very optimistic,” he said.
GM’s survival plan also calls for cutting a total of 47,000 jobs globally. That represents the largest work force reduction announced by a U.S. company in the economic downturn. Chrysler said it will cut 3,000 more jobs and stop producing three vehicle models, the Dodge Aspen, Durango and Chrysler PT Cruiser.
Meanwhile, the United Auto Workers union said it has reached a tentative agreement with Chrysler, GM and Ford Motor Co. on modifications to labor contracts, but details were not released. Such concessions were also a condition of the government bailout.
Automotive News reported that Chrysler got the UAW to move on several fronts.
A source said Chrysler will pay overtime only for work beyond 40 hours during a week, instead of daily overtime, and the union gave up two of the four lump-sum bonuses due workers during the current, four-year contract.
Supplemental unemployment benefits also have been limited, the trade publication reported. Idled workers with more than 20 years of service can collect SUB pay for 52 weeks at the traditional 72 percent of take-home pay and another 52 weeks at half pay, the source said. Workers with less than 20 years get 72 percent SUB pay for 39 weeks and half pay for an additional 39 weeks, the source said.
GM said it could need up to $30 billion from the Treasury Department, up from a previous estimate of $18 billion. That includes $13.4 billion previously allocated and $9.1 billion in new loans. The world’s largest automaker said it could run out of money by March without new funds.
GM’s request includes a credit line of $7.5 billion to be used if the downturn in the auto industry is more pronounced than expected. But the automaker claimed it could be profitable in two years and fully repay its loans by 2017.
Chrysler LLC requested $5 billion in new loans on top of the $4 billion it received in December. The company had said it might need an extra $3 billion.
Both requests were part of restructuring plans the two automakers owed the government in exchange for earlier loans.
Ford, which borrowed billions from private sources before credit markets tightened, has said it can make it through 2009 without government help.
GM and Chrysler plan to reduce the number of models they offer to car buyers. GM on Tuesday raised the possibility its Saturn brand could be phased out in 2012 if the division can’t be sold.
The restructuring plans must be vetted by the Obama administration’s new autos task force. President Barack Obama’s top spokesman told reporters aboard Air Force One on Tuesday that he wouldn’t rule out bankruptcy for the Detroit automakers.
The GM job cuts include 10,000 salaried and 37,000 blue-collar positions, amounting to 19 percent of its current global work force of 244,500. A total 26,000 of the cuts will come from outside the U.S. The cuts would take place by the end of this year.